Nighthawk Energy Regulatory News (HAWK)

29 May 2007 07:02

Nighthawk Energy plc29 May 2007 Nighthawk Energy plc Cisco Springs Update The directors of Nighthawk Energy plc ("Nighthawk" or the "Company") (AIM:HAWK), the US focused hydrocarbon production and development company, arepleased to announce an update on operations at the Cisco Springs project,located in Grand County, Utah, in which Nighthawk holds a 37.5 per cent. workinginterest. Running Foxes Petroleum Inc. ("Running Foxes") is the operator andmajority holder of the project. Drilling programme Major Drilling, a Salt Lake City based company, commenced a ten well drillingprogramme at Cisco Springs on 25 May 2007. The location of the wells is basedon offsetting existing producing wells. The drill programme is expected to takeapproximately six weeks to complete. The Company is awaiting approval for the drilling of an additional ten wellsfrom the Bureau of Land Management ("BLM") which is expected to be in placebefore the end of the present drilling programme. A further ten permits havebeen submitted for approval. Nighthawk and Running Foxes are building roads andinstalling pipelines in anticipation of the planned autumn drilling anddevelopment programme. A second leased drill rig is presently cleaning out and deepening existingwells. As additional permits are received this rig will join the first rig inthe drilling of new wells. The availability of rigs in the Rocky Mountainregion of the US has now become positive for operating companies. Aeromagnetic and 2-D seismic surveys An aeromagnetic survey flown by Fugro Airborne Survey has commenced over theCisco Springs project area consisting of 3,400 line kilometres on 1,609 metretraverse line spacings and 4,827 metre tie line spacings and is expected to becompleted within 21 days. The survey is being flown to identify horst and graben blocks that controlledthe development of the numerous Salt Wash, Brushy Basin and Dakota sandstonereservoirs over the Cisco Springs area. In addition, the presence of faults andfracture systems enhance production and identification of those areas by the useof aeromagnetic data will allow the drilling of potentially more prolific areasfirst. The data received from this survey will be used to optimise the futuredevelopment programme. A 2-D seismic survey is planned for August 2007. The survey is designed todetermine if seismic is able to define the existing Salt Wash, Brushy Basin andDakota reservoirs in a cost effective manner. The shallow nature of thereservoirs makes it difficult to shoot 3-D seismic cost effectively. However,2-D can potentially be applied in undrilled areas. The results of the programmeare expected in September 2007. This data will be integrated with theaeromagnetic data to give the Company and Running Foxes a greater understandingof the distribution of the reservoirs, minimise costs and increase productionrates. Land acquisition Nighthawk and Running Foxes have agreed terms on the purchase of a further1,211.19 acres of land adjacent to currently held acreage. This acquisitionwill bring the total area held at Cisco Springs to over 18,000 acres. Theintention is to acquire further acreage via private and public acquisitions. The directors intend to commission Oilfield Production Consultants ("OPC"),independent consultants, to conduct a new reserve evaluation later in 2007 inrespect of the recently expanded lease area and any further acreage that may beacquired prior to the evaluation. The previous evaluation conducted by OPC inMarch 2007 was in respect of an area of 16,500 acres containing a net naturalgas P50 reserve of 94.2 BCF (billion cubic feet), with a NPV10 value of US$192.3million, net to Nighthawk. Payment for balance of consideration for interest in Cisco Springs project Under the agreements between Nighthawk Production LLC, a wholly owned USsubsidiary of the Company, and Running Foxes, Nighthawk Production LLC wasobliged to make certain deferred consideration payments for its 37.5 per cent.interest in the Cisco Springs project. These consideration payments were, inaggregate, US$2,000,000. The directors of Nighthawk have decided that thebenefits of full title of the Company's holding in Cisco Springs are ofstrategic and corporate importance, and so Nighthawk has paid to Running Foxesthe full consideration sum less an allowance of US$28,000 for early settlement. Title in respect of 37.5 per cent of Cisco Spring leases held by Running Foxeswill now be officially transferred to Nighthawk Production LLC. Following the payment of the consideration, Nighthawk and its US subsidiarieshold cash and liquid investments of approximately £8,800,000. For further information please contact: Nighthawk Energy plc 01271 882160David Bramhill, Managing Director office@nighthawkenergy.netwww.nighthawkenergy.net Hanson Westhouse Limited 0113 246 2610Tim Feather tim.feather@hansonwesthouse.com Matthew Johnson matthew.johnson@hansonwesthouse.com Bishopsgate Communications Limited 020 7562 3350Dominic Barretto dominic@bishopsgatecommunications.com Fran Read fran@bishopsgatecommunications.com Notes for Editors Nighthawk is a hydrocarbon production and development company focused onbuilding a portfolio of assets in the US. Nighthawk floated on AIM in March2007 having raised a total of £10 million. Nighthawk holds a 37.5 per cent. working interest in the producing Cisco Springsoil and gas project in Grand County,Utah. Running Foxes, a privately ownedDenver-based company, is the operator and majority owner of the project. At the time of Nighthawk's admission to AIM, Oilfield Production ConsultantsLimited ("OPC"), estimated the following reserves, net to Nighthawk, in theCisco Springs project: P90 P50 P10 Gas (BCF) 74.9 94.2 116.2Oil (MMBBLS) 0.3 0.6 1.1 OPC estimated the NPV10 of Nighthawk's interest in Cisco Springs to be US$192.3million (approximately £98.6 million). In addition, Nighthawk holds an 80 per cent. interest in the Vogel Bartlesvillewaterflood project in Kansas. The initial project area of 160 acres, which theoperator, Running Foxes, estimated to contain oil in place of 3.1 millionbarrels, has increased through land acquisition to approximately 960 acres. Aprogramme of production and injection wells is in progress to determine thereservoir characteristics in preparation for flooding the reservoir andproduction. This information is provided by RNS The company news service from the London Stock Exchange